Consider the Following Scenario to Answer the Following Questions: the Varsity,located

question 59

Multiple Choice

Consider the following scenario to answer the following questions: The Varsity,located in downtown Atlanta,is the world's largest drive-in restaurant.Located near the Georgia Tech campus,the drive-in attracts two distinct types of customers-college students and visitors to Atlanta.The owners are considering offering a student discount of $1 off their combo meal,which is regularly priced at $9.There are 5,000 students interested in purchasing a combo meal,with a maximum willingness to pay of $8.There are 5,000 visiting customers interested in purchasing the combo meal,with a maximum willingness to pay of $9.Assume that each customer,at most,will purchase a single meal and the marginal cost is $5.
-If the Varsity decides to practice price discrimination,what will be its total revenue if it charges most customers $9 for a standard combo meal,but charges a reduced price of $8 for only those customers who show their student identification cards?

• A) $95,000
• B) $90,000
• C) $85,000
• D) $80,000
• E) $75,000

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Definitions:

Abraham Lincoln

A 16th President of the United States who led the country through its Civil War and helped to abolish slavery.

Slavery

A system in which individuals are owned by others, deprived of personal freedom, and forced to perform labor or services.

Fourteenth Amendment

An amendment to the United States Constitution granting citizenship to all persons born or naturalized in the U.S. and guaranteeing all citizens equal protection of the laws.

Equal Protection

A legal principle found in the 14th Amendment of the U.S. Constitution that requires states to treat all citizens equally under the law.